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History of the Proof Platinum Coin Seigniorage Concept, 2010-2013

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"Economist and New York Times columnist Paul Krugman slammed Jon Stewart for his segment on the platinum coin, saying that 'Obviously neither he nor his staff did even five minutes of looking at the financial blogs.'" (original).

"The trillion dollar coin idea made its way to the White House Wednesday. Press secretary Jay Carney said that there is neither Plan B nor a backup plan. It is Congress’ responsibility to pay the bills of the United States. With regards to the trillion dollar coin, he said that he has no coins in his pocket" (original).

"For better or worse (I’ve argued for worse), the White House decided to set up this game of chicken over the debt ceiling rather than the fiscal cliff, which would have been much safer. Killing the coin and the 14th Amendment option, which it did previously, preserves the clarity of this showdown and ensures that Republican capitulation or default are the only choices for resolution" (original).

"Obama is following in the well-worn footsteps of Cortés, who scuttled his ships upon arrival in Mexico, the ancient Chinese general Xiang Yu, who ordered his troops to destroy their boats and supplies before the battle of Julu (“break the kettles and sink the boats”!), and the ancient Romans, who routinely burned their boats or bridges as a deliberate tactic" (original).

"The Obama administration on Saturday killed the idea of minting platinum coins in the denomination of 1 trillion U.S. dollars to generate revenue and avoid the looming battle with Republicans on raising the federal government's debt ceiling" (original).

"The kids were getting rambunctious, so the grownups had to step in. ... The grownups understand what the kids don’t; money is serious business and playing silly mind games with the public and the markets that undermine faith in the monetary system is a Very Bad Idea." (original).

"Even liberal TV host Jon Stewart found the idea ludicrous. 'How about a $20 trillion coin?' said Mr. Stewart on Thursday’s 'Daily Show' on Comedy Central. 'Or, maybe do one of these — I was digging through the White House couch cushions and Eisenhower must have left one of these $100 quillion bills laying around'" (original).

"Poof. Political problem solved. The Congressional cowards would have no need to cut even one penny of spending nor to raise anyone’s taxes unless there was a strong desire to stick a partisan finger in somebody’s eye. As any drug dealer will quickly tell you, this is where the beauty begins. Give the Congress a taste of free money and it will soon become addicted" (original).

"Using the spot price for platinum of $1,629 per ounce at the close of business on 11 January 2013, we estimate that it would take just over 613,873,542 ounces of platinum to make the coin, which works out to be about 38,367,096.4 pounds, or a bit over 19,183.5 tons" (original).

"Regardless, the administration's position now is clear. The debt ceiling must be lifted, and they will offer no "concessions" to do so. With the platinum coin out of the equation – and with the so-called "constitutional option", where the President cites the 14th amendment's command that the validity of the public debt "shall not be questioned" and ignores the debt ceiling, ruled out by the White House last month – the Republicans can be under no illusions that if they fail to concede, America will definitely have a messy government shutdown, and will likely enter technical default on its public debt" (original).

"The idea, which started on the Internet, was sparked by a curious passage in the 14th Amendment of the U.S. Constitution that may (or may not) allow the government to mint such platinum coinage. The proposal then got some traction, most notably from Nobel Prize-winning economist Paul Krugman, and seemed to be held out as a threat if Congress couldn’t get its act together and come up with a solution at the base of this fiscal wall" (original).

"A polite round of applause, then, to the Obama administration officials who quietly deep-sixed the horrifyingly hilarious proposal that had gained currency over the past month or so: to mint a trillion-dollar platinum coin. ... Never mind the powers of Congress or the damage to the value of the dollar or the signal that such an insane and desperate gimmick would send to markets around the world" (original).

"After I spent the last two weeks explaining that the Treasury would mint a second Joe Biden before it minted a trillion-dollar platinum coin, that President Obama would make Kim Kardashian his chief of staff before making the coin fantasy a reality, it would be easy for me to gloat. So I will! The coin was a self-evidently wackadoodle idea, and the pundits who fell in love with it should have remembered Obama isn’t in vaudeville" (original).

"Ben Bernanke appeared at the University Of Michigan Ford School Of Public Policy yesterday and he spoke at length about the current economic situation in the US.

[BERNANKE:] And the first audience question is that, if Treasury had [inaudible] trillion dollar platinum coin [laughter], would the Fed have accepted it and credited Treasury's accounts? If not, why not and what does this mean for the independence of the Fed moving forward?

Well, as you--I'm not going to give that any oxygen. [Laughter] As you probably know, the Treasury and the Federal Reserve over the weekend, the Treasury issued a statement which the Federal Reserve approved stating that we didn't think this was the right way to deal with this problem"

"The short-lived debate over whether minting trillion dollar platinum coins could solve America’s fiscal restraint (or, rather, lack thereof) appears to have ended—the Treasury and Fed have both declared “no way.” Which clears the way for a fresh debate on raising the debt ceiling the traditional way (i.e. the way it’s been done 105 times before)" (original).

"But whether or not creating a $1 trillion coin to avoid defaulting on the debt was reasonable, in accounting terms it would have been no big deal — simply a larger scale of what the Treasury and the Fed do every day" (original).

"Over the weekend, Treasury Department officials announced the Obama administration would not pursue the minting of a trillion-dollar platinum coin as a way of reducing our debt or deficits.

But many on the political left are still pushing the idea as legitimate and urging the president to reconsider his position.

Most Republicans were watching this movement with a combination of amusement and bewilderment, but the traction behind the coin idea is now leading to legislative efforts to prevent the government from ever pursuing such an idea" (original).

"The United States Treasury Department said on Saturday it will not produce platinum coins as a way of generating $1 trillion in revenue and avoiding a battle in Congress over raising the US debt ceiling" [lead-in to Reuters story] (original).

"Rep. Nadler:But the coin is so clearly legal, so clearly does the job, I don’t understand why they took it off the table, I don’t understand where they are at this point. As I said, I don’t know what actions there are at this point, other than they should have Wall St., big business gets the Republicans backing down" (original).

"The novel idea [of the platinum coin] was taken seriously after big-spending economists and commentators like Paul Krugman pushed for it to be considered. But the government declined to use such a creative approach to the debt limit" (original).

"Reports suggest the Federal reserve offered some technical reservations when asked about the idea, and the Treasury Department then concluded that it did not have the authority to actually mint the coin. Maybe.

The real reason the administration probably wouldn't employ the coin even if they really believed they could lies in the debate between Paul Krugman and Jon Stewart. It's not the details of the debate. It's the debate itself. Krugman thinks it can and ought to be done. Stewart ridiculed it because it sounds ridiculous. (Krugman responded; Stewart responded to the response.) The satirist's initial instinct was visceral. A coin? Really? It sounds too good to be true.

The moment the administration embraces the idea of a coin is the moment that the coin becomes the lead story on newscasts. The optics of the debate would flip, and the onus would be on the administration to explain how minting a coin isn't as absurd as it sounds and isn't a gimmick and really would work. ' (original).

"So the scheme as proposed would actually require both fraud and a conspiracy with the Federal Reserve to accept an essentially counterfeit coin at face value. But it is unclear who might have standing to legally challenge the scheme, and it has somehow seemed to have passed the laugh test and entered the realm of political feasibility" (original).

"The coin gambit reflects magical thinking and the worst type of Washington sophistry. Rather than dealing with a serious and growing problem, the coin idea is an attempt to find a cute gimmick that sidesteps it. The United States is rapidly spending itself into insolvency" (original).

"Childish admonitions about spending within our means are not a substitute for serious thinking about the economy. A joke $1 trillion platinum coin is an appropriate response to "leaders" who want to play games making up scare stories about deficits and debt" (original).

"Both sides of the coin-operation would need to be in cahoots because if the Treasury made it, the Fed would have to credit it to the government’s account in order to give it enough funds to pay off its debts. It’d all need to be on the books as an official transaction" (original).

"Platinum Coin Idea Is Rejected by White House. This is far more problematic than markets realize. The President had a choice. The debt ceiling thing expresses ‘the will of Congress’ where Congress makes laws for the executive branch to execute. The President has also sworn to uphold the Constitution which says the President has to pay the nation’s bills. The President has so far decided to abide by the will of Congress." (original).

"So the first question is whether a newly minted coin counts as 'moneys held in the general fund of the Treasury.' I haven't been able to find any statutory guidance on what this phrase means. But let us grant for a moment that the coin would count as money in the general account. This would mean it could be deposited at the Fed.

But it wouldn't necessarily mean that it could be spent. The second phrase of Subsection 1 [ Section 15 of the Federal Reserve Act] describes what creates deposits against which the government can draw checks. It says that "revenues of the Government or any part thereof may be deposited." Is the platinum coin revenue?" (original).

"The protestations notwithstanding, the coin proposal actually looked pretty good from a Republican perspective. They don't want a default, but they don't want to raise the debt ceiling. If Obama minted the coin -- or more accurately, if he ordered Treasury to mint the coin -- the GOP would get everything it wants: a resolution to the crisis, a satisfactory conclusion without so much as a floor vote, and an off-the-wall scheme they'd use to criticize the White House as reckless and irresponsible for a long while" (original).

It looks like the American people have been cheated out of a precious teachable moment. Demonstrating their ability to think two moves ahead, something their Republican opponents seem incapable of, the Democratic leadership has decided to stop dancing around the threat to issue a trillion-dollar coin. The Treasury Department, Saturday, finally issued a flat out denial. (original).

"The U.S. Federal Reserve and the Treasury Department have rightly killed the $1-trillion coin proposal. Issuing the coin would be poorly understood by the public, could spook foreign investors and it would give the Treasury Department money creation powers that are best left to the Federal Reserve" (original).

"The trillion-dollar platinum coin is one of those out-of-left-field ideas that can be used to explain to a middle school math class the relationship between the money supply and national debt, except that a trillion coin has an odd and separate symbolic value in that it would not add to the money supply simply because nobody could make change for it. If it can't be used practically, it's like writing a check with a billion zeros on it. It only looks like it's worth a lot. In reality, it's worthless and we have to live in the real world, after all" (original).

"But it looks less like a power-grab when you're dealing with a Congress that includes people who don't seem to understand what the debt ceiling is—a commitment to pay the bills the government has already incurred, not to increase spending by expanding existing programs or creating new ones. On its face, raising the debt ceiling sounds like you're asking for a higher limit on your credit card. Really, it's saying you're not going to refuse to pay your mortgage and then dare the bank to foreclose on the house" (original).

"[Heidi] Moore does not understand how a sovereign currency operates. The U.S. has a sovereign currency. When we issue coins we do not have to worry whether the metal in the coin has a market value at least equal to the value we engrave on the coin. We deliberately use less expensive metals such as copper and zinc to make our coins. It would be foolish to use more expensive metals. The value of our coins has nothing to do with their composition. Everyone knows this, for we also use bills. " (original).

"[H]ow does one “deposit” a trillion dollar coin? Does the Treasury secretary just stick it in his front pocket and walk it down to the Federal Reserve? Does the Fed have tellers? Does he have to fill out a deposit slip? And hey, wouldn’t this be an open invitation to some supervillain to try to steal the coin?

"So the overall effect would be an extra trillion dollars of bonds in private hands, exactly as though the Treasury had borrowed money in the first place? Yes. The economics of this are surprisingly tame. It’s the politics that are up for grabs, and there are really two questions here. The tactical issue is who would look stupider — Republicans in Congress for using the debt ceiling to prevent the Treasury carrying out Congress’s instructions, or the Obama administration for responding to that threat by using a trillion-dollar coin" (original).

"The most interesting was the trillion dollar coin, which would have been minted out of pure platinum and stored by the Treasury Department as an asset. Presumably, we would all go to our safety deposit boxes and pull out our platinum jewelry and take off our wedding rings and send them to Washington. (Just sorting the real from the fake would be quite a feat.)

The resulting coin would be so gigantic it would need a cavernous new government facility, which every legislator would want in his/her state. It would never get built because that would take an act of Congress, and it's clear Congress doesn't know how to act.

Strangely, the White House did not immediately ridicule this idea" (ORIGINAL_URL">original).

The economy hitting the debt ceiling and going cold turkey to a balanced budget is a far more catastrophic event than even going over the full cliff would have been, as it disables the "automatic fiscal stabilizers" and instead triggers a pro cyclical downward spiral in output and employment. ....

In other words, if the economy slows because we've hit the debt ceiling, many of the safety nets we've built for the economy come apart. We'll be in a free-fall" (original).

"The coin debate is dead, for now. It is very likely that in the following months this debate will reappear in the media. The problems of the fiscal cliff and American public debt have not been solved so, it is likely that both politicians and economists will be tempted to reconsider this magic, but ultimately toxic, solution to the problems of the US economy" (original).

"So much for the US$1 trillion platinum coin idea. ... Such a coin could would weigh 15.96 tonnes, the equivalent of nearly seven Saturn V rockets, and occupy 904 cubic meters. It would be 24 meters wide and nearly two meters thick. Not very practical but difficult to steal" (original).

"The coin appears to remove the constraints on government finance by allowing the government to just "print" money. But like Dorothy with her ruby slippers, that power has existed all along.

"[A] government cannot become insolvent with respect to obligations in its own currency. A fiat money system, like the ones we have today, can produce such claims without limit," said Alan Greenspan in 1997.

If the coin reminds us of that power, it will have done its job." (original).

"'It’s really a shame that the administration is ruling out one of the very few bargaining chips it has with Republican extremists who are intent, once again, on using the debt ceiling as a means of political blackmail,' said Rep. Jerry Nadler (D-N.Y.), who was a proponent of the coin solution" (original).

"The administration's decision to refrain from minting a coin puts the onus on both branches of government to forge a deal and sets up a battle like the one in 2011, when the president signed an extension of the debt limit over the House's objections" (original).

"This was probably the least surprising development in the history of developments. It wasn't just that the trillion-dollar coin would have been a political liability because it sounds silly -- that was the best, and only, argument against it -- but rather that it required the Fed to give up its sole control of monetary policy. The Fed would not do that" (original).

"The administration decided against negotiating with the GOP over potential terms for raising the debt ceiling, even though they could have tried for the Grand Bargain they've been trying to get for the past several years. They've asked for a clean increase of the debt limit instead, threatening default. They've also now decided to commit to not sidestepping around the debt ceiling using legal measures, either by minting the platinum coin or declaring the debt ceiling unconstitutional via the 14th amendment" (original).

"The idea is ridiculous only in its extremity. Since the days of King Croesus of Lydia, who minted the first standardized gold coins in the sixth century B.C., every sovereign has ensured that the face value of each monetary coin is greater than the value of the metal required to make it. This policy is essential because, if the coin is worth more than face value when melted down, the society ends up with a lot of melted metal and no currency in circulation. Such a policy is also profitable for the sovereign, because the government acquires goods and services at the coin’s face value, even though it costs less than that to manufacture. This form of arbitrage is called 'seignorage.'" (original).

"[T]he platinum-coin debate, for all its absurdity, was in fact packed with the basic principles of monetary economics. Here are five lessons that the trillion-dollar coin should teach us about how money really works: (original).

"But this was still a very bad idea, and Treasury was right to rule it out as an option. It would have involved the Fed in direct, off-market, financing of the government, compromising its independence. It would have relied on a loophole in a law designed to allow Treasury to issue coins of any denomination for commemorative purposes. It may or may not have held up in court, but it likely would have been challenged, creating legal uncertainty and perhaps even a Constitutional crisis if Congress challenged what would have been, in effect, the President’s usurping control of monetary policy. The result would have been market turmoil, broad economic harm, and evidence to the world of our inability to govern ourselves" (original).

"Treasury Secretary Tim Geithner, who leaves office Jan. 25, has not personally addressed the coin proposal. However he showed in May 2009 that he is not unfamiliar with large denominations, showing the House Appropriations Committee a hyperinflated $50 billion Zimbabwe bank note he carries in his wallet. Geithner lived in Zimbabwe for a time growing up" (original).

"In a town that specializes in stupid ideas, this one reached a new level of stupid. Think about it: If the president could really create a trillion dollars out of the ether simply by minting a single $1 trillion coin, why would we stop at one? We could mint 17 of these puppies and eliminate the national debt! Heck, we could mint 18 and have a trillion-dollar surplus!" (original).

"Did you feel it? The earth moved under our feet a little bit over the past week. I’m feeling quite grateful to beowolf and Joe Firestone and everyone else who laid the foundation for Mint The Coin, and to Stephanie Kelton (for creating) and Joe Weisenthal (for popularizing) the #MintTheCoin hashtag and circulating the White House petition" (original).

"[I]n 1996 something remarkable happened. Over the objections of a Democratic administration Republicans in Congress passed a statue, 31 USC 5112(k), permitting the issuance of platinum numismatic coins. The astonishing part was that Congress set no specific denomination, writing perhaps the biggest blank check in history.

Since the Federal Reserve buys coins at face value, this gave the Secretary of the Treasury the power to create debt-free money at will.

To create this debt free money, the Secretary of Treasury must instruct the mint to produce a platinum numismastic coin with, say, a $1 trillion denomination. This coin can then be deposited at the Federal Reserve, and the Fed will credit the account of the U.S. government for the face value of the coin. (original). Part of a Times "Room for Debate" series.

"[H]aving foresworn the coin option, the administration puts even more pressure on itself to prevail in a standoff with the Republicans. Obama says he won’t negotiate over the debt ceiling. But, come February, he (or his allies in Congress) will be be negotiating with Republicans over two other fiscal issues, the automatic spending cuts of the “sequester” and the need for a new spending bill to keep the government operating. Republicans are sure to bring up the debt ceiling in these discussions. Treating it as a distinct matter, off-limits for negotiating, will be difficult" (original).

"Fighting banana republic with more banana republic is far more dangerous than coin supporters think. It's one thing for Republicans to go crazy. It's another for craziness to essentially become institutionalized. When liberals stop fighting this kind of stuff, we really are on our way to banana republic-hood" (original).

"[T]here is one organization that is considered to be so sacred in Washington D.C. that Obama will not dare utter a single negative word against it. That organization is the Federal Reserve. ... (original).

"We could use various money-minting gimmicks or legal maneuvers to avoid the ceiling, while avoiding the reality that the ceiling is a reminder that we are borrowing way too much. Rather than heeding all the warning signs, Congress and the president would prefer to find new and creative ways to kick the can down the road. At some point, this punting will cause tremendous damage" (original). Part of a Times "Room for Debate" series.

"[H]aving foresworn the coin option, the administration puts even more pressure on itself to prevail in a standoff with the Republicans. Obama says he won’t negotiate over the debt ceiling. But, come February, he (or his allies in Congress) will be be negotiating with Republicans over two other fiscal issues, the automatic spending cuts of the “sequester” and the need for a new spending bill to keep the government operating. Republicans are sure to bring up the debt ceiling in these discussions. Treating it as a distinct matter, off-limits for negotiating, will be difficult" (original).

"Apart from the technically legal but wildly unrealistic device of minting a trillion-dollar platinum coin, prioritization is the approach that does the least violence to the Constitution.

But this approach, too, would be a disaster in practice. Stopping government employees’ pay, retirees’ Social Security checks or seniors’ Medicare reimbursements would bring chaos to the lives of millions of Americans – and would be catastrophic for our recovering economy.

The inadequacy of each of these alternatives highlights a truth I pointed out during the last debt-ceiling crisis: we cannot find solutions to all of society’s problems in the Constitution. Here, we must find them in political courage, in compromise and in a congressional willingness to fulfill its unique constitutional duties. Nothing else will avert the impending crisis. (original). Part of a Times "Room for Debate" series.

"The coin debate triggered something. The platinum coin is a big shiny, reminder that in some way, somehow, the monetary authority of the United States rests with the American people, even if the plutocratic architects of our financial system and the owners of our country have succeeded over time in burying that authority under many layers of convoluted technocracy and confusing delegations" (original).

"Tim Duy has a great review of why platinum coin seigniorage was a bridge too far for Treasury and the Fed. I think he’s pretty much spot on.

However, with Greg Ip (whose objection Duy cites), I’d take issue with the following:

Ultimately, I don’t believe deficit spending should be directly monetized as I believe that Paul Krugman is correct — at some point in the future, the US economy will hopefully exit the zero bound, and at that point cash and government debt will not longer be perfect substitutes.

Note that there are two distinct claims here, both of which are questionable" (original).

"Imagine being able to mint a coin or print notes to take care of all your debts. Most of us cannot. A government can. And the US government should, many suggested. But it will not. The administration on Saturday squelched all speculation that it will mint a $ 1 trillion platinum coin to get around the debt ceiling and doggedly uncooperative Republicans" (original).

"What about the "trillion dollar platinum coin" idea? This is the law that grants the executive the right to mint platinum coins of any denomination. Why not mint a few that add up to a trillion, and then pay it to the Fed and draw cash from the Fed based on that coin, to pay our bills? That is perfectly legal--Congress did not limit the use of the coins in the legislation authorizing them. If Congress can play brinksmanship games by threatening to put the US in default and destroy our economy unless the majority enacts the pet legislation of the minority to destroy the Social Security, Medicaid, and Medicare safety net programs, then the Executive should be willing to use every tool at his disposal to prevent that. Of course, Treasury today said it wouldn't do that. See Anne Lowrey, Treasury Won't Mint Coin to Defy Debt Ceiling, New York Times (Jan. 12, 2013). Stupid of them to do so, since it is clearly within the law. Obama cannot "wimp out" on this debt ceiling issue (to use Krugman's term): if he lets the zanies in the GOP use these tactics to force changes in the safety net programs, he will have destroyed the Democratic party and the recovery from the Grand Recession in one fell swoop" (original).

"All that said, I'm glad we had this conversation. Direct discussion of the platinum coin was a good reminder that many people, including influential media figures, appear to have no idea what money is or how the monetary system works. Apart from the shockingly widespread view that the value of coins is determined by their metallic content, there was a lot of insistence that creating money was somehow an act of 'magic.' In fact, the way all legal currency is created is that a government agency creates the money. Typically that's the Federal Reserve accommodating bank demand for base money. But all kinds of things can happen. Forget 'Quantitative Easing.' When the Fed does the thing that reporters call "raising interest rates" it doesn't pull an interest rate lever. It sells bonds on the open market in exchange for money. And when that money enters the Fed, it vanishes. When they "lower interest rates" they buy bonds on the open market in exchange for money. Where do they get the money? From nowhere. They just make it. That's money. Whether the electronic process of attributing more or less money to an account is accompanied by a little piece of platinum or not is wholly irrelevant" (original).

"The Epic Tale of Beowulf and the Platinum Coin Come to think of it, wasn’t that the same thing Keynes said? “The General Theory of Employment, Interest and Money started as a silly question in a pointless bull session. I’m just in it for the lulz." (original).

"[A]trillion dollar platinum coin is an idea hatched to sidestep a number of existing laws which either limit the ability of the government to create new gold and silver coins or limits the ability of the US Treasury to issue debt" (original).

"The Obama administration apparently has some other "Plan B" in the works. Could it be the use of IOU's or coupons to pay the bills? Or by discarding the ace up his sleeve, actually the magic coin in his pocket, this quickly has the President decided to simply stake out the moral high ground? No monkey business with the money, no currency hacking, just stand firm, be the grown-up and expect Congress to do the same, and put on their big boy pants and pay their bills. So, the soft currency crusaders have been repelled at the walls of the U.S. Treasury" (original).

"Still, several Democrats had already rejected the idea of a coin on purely political grounds: For a nation so concerned with the deficit would there be a better symbol of out-of-control spending than a $1 trillion coin? Now the Treasury Department has said it won’t mint the coin to prevent a government default, effectively killing the idea for good" (original).

"U.S. Rep. Kristi Noem , R-S.D., announced Thursday that she will co-sponsor the Stop the Coin Act which she said would prevent the U.S. Treasury from minting a platinum coin that could be used to pay the federal government’s bills.

“'o think that some in Washington believe that minting a trillion dollar coin can solve our nation’s out-of-control spending is embarrassing,' Noem said in a written statement." (original).

"So it wasn't just a joke? The US Treasury and Federal Reserve say they are not creating $1 trillion by minting platinum coins. The idea actually gained some currency among Democrats in recent days as a way of sidestepping congressional Republicans who threaten to reject a necessary increase in the debt ceiling unless deep spending cuts are made. Now they're all back to the drawing board." (original).

"One day after Democratic leaders in the Senate urged Barack Obama, the US president, to sidestep Congress if necessary and use any legal mechanism to increase the debt limit, the Treasury released a rare Saturday statement explicitly ruling out creating a $1tn coin to avoid a possible crisis" (original).

"A platinum coin is one of the many strategies Democrats are exhausting to avoid heading to the negotiation table with Republicans; there are also reports that top Democratic senators request that Obama use his presidential power to extend the debt ceiling, invoking the 14th amendment which states that the U.S. debt “shall not be questioned" (original).

"I think Bernanke got some calls from other Central Banks. They told him it would be a dangerous precedent for America to do this. If there are coins to be printed, it would be better if some other country (possibly Japan) do it first. After all, the dollar is still the #1 reserve currency. The foreign CBs have some say in this." (original).

" The coin debate triggered something. The platinum coin is a big shiny, reminder that in some way, somehow, the monetary authority of the United States rests with the American people, even if the plutocratic architects of our financial system and the owners of our country have succeeded over time in burying that authority under many layers of convoluted technocracy and confusing delegations" (original).

"But it was the Federal Reserve that killed the proposal, the official told BuzzFeed, denying a purely political rationale for the announcement, saying the independent central bank would not have credited the Treasury's accounts for the vast sum for depositing the coin" (original).

"[W}hat went wrong here is a lack of professionalism on the part of Stewart and his staff. Yes, it’s a comedy show — but the jokes are supposed to be (and usually are) knowing jokes, which are funny and powerful precisely because the Daily Show people have done their homework and understand the real issues better than the alleged leaders spouting nonsense. In this case, however, it’s obvious that nobody at TDS spent even a few minutes researching the topic. It was just yuk-yuk-yuk they’re talking about a trillion-dollar con hahaha. Hey, if we want this kind of intellectual laziness, we can just tune in to Fox" (original).

"The U.S. Treasury Department and Federal Reserve oppose the idea of minting platinum coins as a way to avoid the U.S. debt ceiling, according to a statement from Treasury spokesman Anthony Coley" (original).

"[C]an we now agree that indeed there is evidence Congress intended it [seigniorage] be allowed to substitute for authorized debt and that it [seigniorage] has been used historically for that purpose?" (original).

"The Simspons' trillion dollar "Truman Bill" was an absurd solution to an absurd fictional problem. The trillion dollar platinum coin, on the other hand, is an absurd solution to an equally absurd, very real problem. That's the point.

But if we're gonna mint the coin, we might as well put the right guy's face on it: Ronald Reagan." (original).

"The Obama administration ended speculation Saturday that it would mint a trillion-dollar platinum coin as a way to avoid the debt ceiling. The idea of minting such a coin to invalidate the debt ceiling purportedly comes from part of the 1997 Omnibus Consolidated Appropriations Act. The words were written by then-Delaware Republican Rep. Mike Castle, who purportedly is a coin collector" (original).

"There are no formal counts of platinum production before 1975, but based on recent records and historical accounts, there is no evidence to suggest the value of the world’s total platinum supply comes within reach of the national debt" (original).

"Meanwhile, I get calls. The White House insists that it is absolutely, positively not going to cave or indeed even negotiate over the debt ceiling — that it rejected the coin option as a gesture of strength, as a way to put the onus for avoiding default entirely on the GOP" (original).

"If the White House decides to mint the coin, the Treasury should put Reagan’s picture on it. And if I were president Obama, just for fun I’d drill a hole through it, put it on a chain, and wear it around my neck at the next State of the Union. And that’s reasons 1,345,839 why I’ll probably never be president" (original).

"'Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,' [Treasury spokesman Anthony] Coley said in an e-mailed statement yesterday" (original).

"The idea of minting a trillion-dollar coin drew wide if puzzling attention recently after some bloggers and economic commentators had suggested it as an alternative to involving Congress. ... The Washington Post earlier published a report that the Obama administration had rejected the platinum-coin idea. " (original).

"'It is a funny thing. But you want to be funny from a point of view of understanding what the issues are. There’s a reason we’ve gotten to this place,” Krugman said of Stewart’s 'Daily Show' coverage of the platinum coin issue, which Krugman criticized as 'intellectual laziness' in a recent blog post. 'Obviously neither he nor his staff did even five minutes of looking at the financial blogs. Lots of people think it’s a bad idea. Lots of people think it’s a good idea. But it’s not just, Oh, those idiots.'" (original).

"That's because the law provides for this as a commemorative coin issue, not a monetary instrument. Current law has a statutory cap on the amount of monetary metallic coinage the Treasury can issue, and it's tiny. It would be blatantly illegal to attempt to circumvent that law in this fashion, and the appropriate response from The House to such an attempt (or, for that matter, trying to invoke the 14th Amendment) would be immediate impeachment and refusal to consider all other legislation until Obama was removed from office" (original).

"[Free Exchange columnist:] There are at least three reasons why this option has been rejected. The first is that it's probably not legal for the Federal Reserve to facilitate such a transaction for the purpose of financing the government. The second is that even if it were legal, it would seriously hurt the reputation and credibility of the Fed, fueling accusations it had subordinated monetary policy to fiscal policy. (This is discussed in more detail in a previous post.) The third and most important is that it lets Congress evade its responsibility for dealing with the debt ceiling" (original).

"[I]t seems odd that the Fed would decide that there's some legal tender that it will recognize, and some legal tender that it wouldn't recognize. Furthermore, by placing the blame on the Fed, it would seem that the White House/Treasury wanted to keep this idea available as a last-second escape valve in case things were about to get that bad" (original).

"I’ve spent time in the South African bush among wild lions. My guides explained that lions perceive the world through gestalts , very different from how we perceive the world. A group of people in an open Range Rover can enter into a hunting party of lions, including mothers with their cubs, with impunity because the lions perceive them in terms of the familiar sound, smell, and sight of you-in-Range Rover, neither a threat nor an opportunity for an easy meal.

I’ve been surrounded by a pride of 20+ lions, all within 10 to 30 ft., lounging about, taking a siesta during a hunt. Even as they looked directly into our eyes they remained indifferent. But if I were to stand up, I would become a human, as though teleported, standing on top of the Range Rover gestalt and instantaneously in danger.

I suspect this is what happens when a lion “tamer” raises a chair. The chair creates a different gestalt that disrupts, erases or intervenes in the gestalt of the human and interrupts the feast, flight or fight instinct it triggers.

Obviously, a chair is a poor defense against a lion, so something deeper than mere distraction is going on here. I’m told 90% (or so) of all charges are false charges designed to intimidate. If you can manage to hold your ground, despite immediately vacating all liquid in your body, the lion stops her charge.

Sort of like the House GOP.

But then there’s that other 10% of the time. That’s why Obama should have kept the TDC in his back pocket." (original).

"(The Borowitz Report)—President Barack Obama was “totally furious” he spent a week of his time posing for a trillion-dollar platinum coin that would never be minted, a White House source confirmed today"" (original).

"I really hope this is just the Treasury and Fed giving each other cover (that's not awesome either) rather than the Fed deciding it has the authority to determine which bits of legal tender the Treasury can and can't deposit into its account." (original).

"The key point is that certain elementary truths usually reserved for our good selves have penetrated the dull consciousness of a small minority of the 99 Percent. This process was most recently aided by the platinum coin saga (h/t to Tom Hickey for the link), which, if it had been allowed to proceed unimpeded, would have exposed to more of the 99 Percent the existence of these simple truths, some of which are not even comprehended by the dimmer members of our own, uppermost percentile. Fortunately, our president is on the same side as the Treasury, Fed, and GOP on this issue. Our side" (original).

"The coin thing sounded great, though, right? Well, it sounded a bit far-fetched…even more so when you consider that fiscal theorem originated in Los Angeles, not Washington D.C. It is, in fact, ripped right from the halcyon days of the late 1990s—when Butterfinger BB’s still existed, and The Simpsons was in its ninth season. In that stretch of episodes, there was one called The Trouble With Trillions, an amusing romp that alluded to Stark Trek and included Fidel Castro" (original).

"The Treasury Department will not mint a trillion-dollar platinum coin to avert another battle over raising the debt ceiling, meaning Congress and the White House have no option but compromise in order to avoid default" (original).

"With the first half of the fiscal cliff behind us, the White House needs leverage in negotiating with House Republicans—despite its insistence that it refuses to negotiate—and “Mint the Coin” was an interesting, Austin Powers-esque proposal that many folks thought could be that leverage. It was an interesting and quirky idea that would have been toxic to Democratic candidates everywhere. There are few things more potentially dangerous to a party working to preserve entitlement spending than simply conjuring money out of thin air. The GOP attack ads write themselves. They could have been devastating in 2014′s midterm elections" (original).

"[T]he Treasury could simply enter into a Repurchase Agreement with the Federal Reserve over All Unleased Federal Offshore Oil Rights or some other suitably large asset. The Treasury would sell the right to lease Federal Offshore Oil Rights to the Federal Reserve for say $500 Billion and simultaneously write a contract to purchase those same rights back on Jan 1, 2014 for $500 Billion. The Treasury has created a spending obligation but I assume, no debt. Yet, the operation provides $500 billion in immediate liquidity." (original).

"When it comes to the Most Important Political Topic Of Our Times™—namely the possible minting of a $1 trillion platinum coin—Ezra Klein advances the ball today. The idea behind this slow-news-week chimera is that the Treasury would mint the coin, deposit it at the Fed, and voila: the government has more money to spend even though we've hit the debt ceiling. Up to now, we've all argued about whether this is a good idea; whether it's legal; and whether President Obama would ever consider this option in the first place. But there's always been another question rolling around in my head: would the Fed even accept the coin? If they won't, the whole idea runs aground instantly.

Well, it turns out they wouldn't: "Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit," a Treasury spokesman told Ezra today" (original).

"However, as I’ve noted before, I don’t think that the advocates of the Platinum Coin strategy ever had a realistic view of how Republicans, even moderate Republicans, would react to something as egregiously extra-legal as this. Instead of “solving” the debt ceiling crisis, minting a Platinum Coin would likely exacerbate it and, in the process, create a Constitutional crisis that would likely sour relations in Washington between the parties even more than they already are for the remainder of Obama’s Presidency." (original).

"[Chris Hayes] showed a cartoon that was made by Abraham Lincoln's critics, showing him creating cash with a magic money machine, that looks so much like a lot of the anti-Bernanke stuff you see online today." (original).

"Proponents of the coin have said they want to avoid a repeat of the near-self-induced default by the U.S. Treasury in July 2011. That battle caused the stock market to fall, cost the U.S. its Triple-A credit rating and produced the still ticking 'fiscal cliff' budget time bomb" (original).

""Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,' said Treasury spokesman Anthony Coley in a statement" (original).

"This news is not at all surprising. As I previously argued, if President Obama minted the platinum coin, it would have been a huge political gift to Republicans. The idea was both easy to mock and to attack as a new power grab by Obama. But now, Republicans leaders are in a more difficult position, because it will be easier for Obama to lay the blame for any economic chaos that could result from a failure to raise the debt ceiling directly at the feet of the GOP" (original).

"... Democrats are somewhat dumbfounded by the administration's decision to rule out the trillion-dollar coin option. Earlier, a Senate Democratic aide told Business Insider that "it's certainly a strange negotiating strategy to go out of your way to decrease your leverage by taking options off the table. (original).

"'Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,' said Treasury spokesman Anthony Coley in a statement obtained by TPM" (original).

"Treasury's rejection of the coin and the 14th Amendment leaves only one other non-traditional option for averting the debt ceiling: issuing IOUs instead of actual money to make good on obligations. The move would jeopardize confidence in U.S. economic policy and would not be immune to legal challenges. California was able to stave off its own budget crisis with IOUs in 2009, however" (original).

That’s how it should be. RT @theplumlinegs: Nixing of coin presents GOP with stark choice: Compromise, or be seen destroying US economy.

— Kevin Drum (@kdrum) January 12, 2013

Which rather smacks of Democrats playing their own game of chicken with the national economy for their own political gain, to me. In fact, it sounds very like the Dem plan, from people who all earn more than the national average, is something along the lines of 'The Republicans will blink first but even if they don’t and the economy tanks all the poor people who will get even poorer will blame them and vote for us, so where’s the downside?'”

"This is probably the coolest plan, in that it sounds like something from a James Bond or Austin Powers movie, plus it was a Simpsons episode. In theory, the government would never have to ask Congress to raise the debt ceiling again. ... The coin's coolness is also a liability" (original).

"Three things worth thinking about in Chris’s presentation: First, the degree to which concern over the coin stems from the perception that it 'illustrates the uncomfortable foundational reality of modern capitalism: Money is nothing more than a shared illusion.' The optimistic way of framing that dimension of the opposition is that it’s illogical and can be corrected with calm counter-argument. The more pessimistic take is that part of why modern capitalism works is that policymakers typically succeed in keeping the public from thinking too hard about how fiat currency is created. (original).

"The Treasury Department said Saturday that it will not mint a trillion-dollar platinum coin to head off an imminent battle with Congress over raising the government’s borrowing limit. ... The idea of minting a trillion-dollar coin drew wide if puzzling attention recently after some bloggers and economic commentators had suggested it as an alternative to involving Congress. " (original).

"Apparently fiscal and monetary cooperation is alive and well - the US Treasury and the Federal Reserve conspired to kill the platnium coin idea. In retrospect, we should have seen this coming. As the debate continued, it became increasingly evident that the platinum coin threatened the conventional wisdom in very deep and profound ways. It was a threat that could not be endured by Washington. If there is no difference between cash and Treasury bonds, why should we issue bonds at all? Why not simply issue cash? In other words, at the zero bound, what is the argument against monetizing deficit spending?" (original).

"'This now puts all the pressure back where we believe it belongs: on the Republicans,' a senior administration official told the Huffington Post. 'There are no magic coins. There is no way to get out of this. We feel fine about the politics of it. We think we are in a stronger position if Republicans realize there is no out'" (original).

"And just like that the most surreal two weeks of sheer monetary idiocy is over, with the Treasury and the Fed both formally announcing the death of the trillion trollin' dollar platinum coin idea, which was nothing but a cheap charlatan trick devised by page view-desperate media outlets to dumb down their already confused audience and distract from the fact that the US is, sadly, once again on the verge of bankruptcy" (original).

"And a great sigh was heard across the land. The dreams of a yearning nation will, it seems, be left unfulfilled. Yes, my friends, even worse than when Mighty Casey Struck Out, the Treasury Dept. has ruled out the minting of the $1T coin to solve our fiscal woes" (original).

"So What Will You Do, Mr. President? If I’d spent the past five years living in a monastery or something, I would take the Treasury Department’s declaration that the coin option is out as a sign that there’s some other plan. ... The thing is, the coin option sounds silly, but it clearly obeys the letter of the law. As far as I can tell, none of the other options — other than outright surrender — has the same virtue. ... As I said, if we didn’t have some history here I might be confident that the administration knows what it’s doing. But we do have that history, and you have to fear the worst. ready to go. Maybe 14th Amendment, maybe moral obligation coupons or some other form of scrip, something. (original).

"I'm not sure withdrawing the threat of the coin or the 14th Amendment remedies qualifies as an offer in that context. But since they've thrown away their only bargaining chips before they even started, it's fair to say that anything they agree to from now on should be seen as something they wanted, not something they needed" (original).

"Ah. Charles Plosser of the Philadelphia Fed is against the platinum coin, which he says “doesn’t solve any real problem” and would hurt our credibility.

Actually, it solves a very real problem: attempted extortion by the GOP. And on the credibility front, who better to lecture us on such matters than a man who has been predicting an inflationary explosion for five years?" (original).

" Put down your comically oversized bags with $$$ scrawled on the side, slip off your burglarin' shoes and drop the crowbar: the trillion-dollar coin is no more, and with it, your dreams of one last big heist just to see if the team still has some of the old magic. From the Washington Post..." (original).

"The Treasury Department will not mint a trillion-dollar platinum coin to get around the debt ceiling. If they did, the Federal Reserve would not accept it.

That’s the bottom line of the statement that Anthony Coley, a spokesman for the Treasury Department, gave me today. 'Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,' he said." (original).

"'Minting the Coin!' contemplates a naked power grab by the Executive Branch of historic proportions. It is a wholesale taking of the Congressional purse prerogative under the Constitution. But, hey, it's an 'emergency'. Of course. It always is when the Article II Executive Branch comes to feed in the name of efficacy" (original).

"Congress has, after all, already decided how much to spend and how much to collect in taxes. To say we can’t borrow to make up the difference is to deny the fundamental laws of arithmetic" (original).

"Just as a $100 bill isn’t made of $100 worth of cotton, a new trillion dollar coin wouldn’t be made of a trillion dollars of platinum. Just a single, small bit of platinum will do. That’s all: it’s really just an invention. Economist John Kenneth Galbraith once said: “The process by which banks create money is so simple that the mind is repelled.” And the same can be said of how our government creates money. The simple truth is it creates money simply out of thin air. Someone at the Federal Reserve punches in a number on a spreedsheet and–voila!–more money. At moments of profound crisis it was precisely this kind of monetary magic that helped the U.S. avoid catastrophe–Abraham Lincoln printed greenbacks to fund the union and his opponents mocked him mercilessly for doing so — which this cartoon from the time, depicting a machine spewing bills, shows. And FDR ditched the gold standard to get us out of the Great Depression. Both those ideas were, at the time, probably about as ridiculous as a trillion dollar coin." (original).

"The best romances are the short ones. The dream of the White House minting a platinum coin worth $1 trillion to avoid a debt ceiling crisis is officially done. [I]t wasn't meant to be, boys. The idea was ridiculous and straight out of a movie. It couldn't happen, ever. It was a little too..." (original).

"The most compelling argument against the coin, in my mind, was opening the Pandora’s box of running a printing press. Economies have been devastated by this action. Taking partial control of the money supply away from the Federal Reserve and giving it to the Treasury could be disastrous." (original).

"The bigger problem is political. The Fed purchases bonds by choice to carry out monetary policy. Being forced to buy the $1 trillion coin would be a textbook case of monetising the debt and a gross violation of the Fed’s independence. The manoeuvre would violate the intent of Congress in creating a debt ceiling (daft though that is). In any case, the idea is just too weird to be taken seriously" (original).

"Following the announcement, White House Press Secretary Jay Carney said in a statement: 'Congress either can pay the tab for spending it has racked up or it can send the nation into default, which would have serious economic consequences.'" (original).

"Money, as we use it, is simply created by either the Treasury or the Federal Reserve. Sadly, I think that most people don't think of money that way. Every dollar is just a share of trust in the U.S. government. But people think it equates to something tangible. For historical reasons, people usually translate it into gold, silver or another precious metal like platinum. This metal fixation is just a fetish but, whatever. Obama's not going for it" (original).

"Regardless, resorting to the $1 trillion coin option would likely undermine market confidence, just as another debt standoff would. The gambit would just be the wildest, wackiest episode on a years-long bender of partisan dysfunction — fighting crazy with crazy. The mere possibility of the platinum coin should prompt the House GOP to stop playing games with the debt ceiling and both sides to cut a long-term budget deal" (original).

"The administration has previously ruled out another oft-discussed debt-limit safety valve, overriding the limit based on the 14th amendment. So “Plan B” discussions will now move to two other alternatives that have been bandied about: prioritizing payments or, as Ed Kleinbard suggested the other day, issuing scrip like California did a couple years ago. Of course, issuing scrip *is* prioritizing payments, but with the added feature (or complication) of a written, transferable IOU" (original).

"But, the game has to end someday. How will it end? Badly. Not even a magical $1 trillion coin will fool the markets. I happen to believe that any additional gaming of the system will spook the bond market and equities markets. Talk of endlessly printing money or minting magical coins will spook the market as badly as an abrupt halt to Fed bond purchases" (original).

"It's hard for me imagine the president or the Democrats having the nerve to do this, but it's possible they'll have no choice. The Republicans are so nuts they may demand things that the Democrats literally cannot deliver." (original).

"With another standoff with Congress over raising the debt ceiling looming as early as mid-February, a petition on the White House website asks the administration to create a single platinum coin worth $1 trillion to avoid a stalemate over lifting the borrowing cap. The petition has garnered more than 7,100 signatures.

An asset of that value would place the United States well within its $16.4 trillion borrowing limits, the argument goes.

Pressed to rule out the idea, White House Press Secretary Jay Carney on Wednesday passed the buck.

"I would refer you to Treasury for the specifics of this question," Carney told reporters. "I can tell you that the president does not believe that there is a backup plan or a Plan B or an off-ramp."

Carney would only say the president doesn't believe there are alternatives to raising the debt limit." (original).

"'The President and the American people won’t tolerate Congressional Republicans holding the American economy hostage again simply so they can force disastrous cuts to Medicare and other programs the middle class depend on while protecting the wealthy,] [Press Secretary Jay] Carney said in a statement. 'Congress needs to do its job.'" (original).

"Treasury: We won’t mint a platinum coin to sidestep the debt ceiling. ... [T]o climb in the water to fight the shark is just irrational when you can stay in a boat and throw sticks of dynamite. ...However, its also possible that the New York Fed has a Manhattan Project or two up its sleeve. Time will tell. .. Tsy blaming the Fed for not issuing the TDC is weak, like blaming your dog for you not going out for a walk this evening" (original).

Pages

METHODOLOGY
Here I am collecting all the material I am find so far on the Proof Platinum Coin Siegniorage (PPC/PCS) concept. We can see, way back in 2010, the epicenter of The Coin concept, which may surprise you: blogger beowulf at Warren Mosler's blog -- and this blog, Corrente. Much of the material is taken from a history of The Coin written by letsgetitdone. Other material was found by following link trails outward. Still other material was taken by searching for "platinum" (at Cullen Roche's sites, for example). Contemporary material came from Google, Twitter, reader mail, and following link trails outward from posts.

I'm seeking to trace the origination and transmission of ideas -- or, as we say these days, "memes." Therefore, although I seek to curate an exhaustive collection of links, I quote interesting or unique, rather than representative, material. "Me too" content and reposts are under-represented.

Any mistakes, of course, are my own, and they will exist: I figured out my workflow as I encountered the data, and I'm sure I haven't backfilled all inconsistencies. In addition, I came up through the left blogosphere, and so my ability to search and sort on material from the right is not as strong as it could be. Please contact the blog or leave comments with corrections or additional links: We want the record to be complete and accurate!

Citibank Plutonomy files

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Beyond war, inflation, the end of the technology/productivity wave, and financial collapse, we think the most potent and short-term threat would be societies demanding a more ‘equitable’ share of wealth."

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Nothing within this site or linked to by this site constitutes investment (snort) advice, or legal advice, or medical advice, or any kind of advice. BANKSTER WEASEL PROPHYLACTIC: The word "alleged" is deemed to occur before the word "fraud." Since the rule of law still applies. To peasants, at least.